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The author here would do well to and understand and use terms like "fixed costs" and "variable costs". There are large fixed costs in the power grid and the aut

by cletus 5y ago

The author here would do well to and understand and use terms like "fixed costs" and "variable costs". There are large fixed costs in the power grid and the author is complaining that the retail price of electricity doesn't reflect the variable costs, leading to distortions and perverse incentives. But this doesn't make prices "lies". > The current net metering system in California is pretty favorable to customers with rooftop solar; in effect, it’s a subsidy. It's quite an overt and deliberate subsidy to foster solar power technology (which has been wildly successful), reduce demand on the grid and to shift the pattern of power usage. Electricity use spikes during daylight hours [1]. This happens to be when the Sun is shining and solar power works. Peak demand is really the only thing that matters in powering a grid. Solar is highly effective at reducing peak usage. I honestly don't know why the author feels like any of this isn't "upfront". [1]: https://www.eia.gov/todayinenergy/detail.php?id=42915 https://www.eia.gov/todayinenergy/detail.php?id=42915

SamBam 5y ago
> It's quite an overt and deliberate subsidy to foster solar power technology I'd say that the issue the author is addressing is that it is not so overt. Sure, if you meditate on it it becomes clear it's a subsidy, but I think the vast majority of the people who take advantage of it simply think "I produce as much as a use, so of course my bill should be zero."
- dboreham 5y ago
  Can confirm, having talked to family members with recent solar installations.
  - stevemadere 5y ago
    The vast majority of people are unwilling/unable to think deeply enough about the system to understand it. Thus, the simplified rule of thumb that generating electricity reduces your power bill is needed for them to even understand the general direction of what needs to be done. Perhaps the power utility could include an explainer page at the back of the monthly statement for those with the interest and capacity to understand it. Maybe 2% of people will read and understand it. The other 98% can just be smug about their lowered power bill and blissfully unaware of their part in accelerating the market shift to solar.
- greendave 5y ago
  Well, if my net usage from the grid were to drop to zero, without solar (say because I used a gas generator or whatnot), I’d basically be paying the utility zero too (modulo some small connection fees). The utility still wouldn’t save on any of its fixed costs though. What net metering with solar does is simply make this option much more practical. The straightforward solution would be to fund major infrastructure costs using something other than volumetric pricing. But it’s easier to just impose fees on solar.
  - Macha 5y ago
    Or to put in a smaller scale and not require adding your own generation, are you stealing from an electricity company's fixed costs if you turn all your applicances off when you go on holiday, or if you have a holiday home which is only occupied 25% of the year? I think the answer is clearly not.
    - greendave 5y ago
      Or for that matter, switching to more efficient appliances or other types of conservation.
  - SamBam 5y ago
    But there's a huge difference between actual zero usage and net-zero usage. That's the whole point. If you're using a generator (or, as another comment said, just use hardly any electricity) then you're not a burden on the system at all (or barely). If you're "net zero" because you feed the grid your excess power during the day and take away power during the night, you're using all their infrastructure. In your example, you don't need the grid, so it makes sense not to pay grid overhead (minus arguments about how we still pay for schools with taxes even if we're not using them). In the solar example you absolutely need the grid. So net metering down to zero is definitely a subsidy. A subsidy I absolutely agree with, but a subsidy none-the-less.
hervature 5y ago
Perhaps you and I are reading this differently. In my opinion, the author clearly delineates the two to be able to make this claim: > In other words, the direct cost of providing an additional unit of electricity or natural gas is only 23% of overall operating expenses. The way I read it, the author is not claiming the subsidy is the misleading part, just that, once there is mass adoption, the price of everything will actually go up to something very close to the current costs being paid by non-solar panel households. That is, at some point, homeowners who build solar panels right before this subsidy ends will get burnt very badly.
- marcosdumay 5y ago
  There's the marginal cost of electricity, and there's the marginal cost of electricity at peak time. The second one is much higher, and solar hits precisely it. Yeah, there is still a subsidy and it will go away at some point, but it's not 77% of the costs like the article states.
snewman 5y ago
Author here. Thanks for the feedback! Agreed that net metering was deliberately designed as a subsidy, and that there was nothing hidden or underhanded about this, it was (and remains) all quite overt. And yet. The inspiration for this post was a discussion on my town's email list, where a lot of people were talking about net metering as if it were the natural and obvious way of doing things (and thus were very upset at the proposal to weaken it). They either never heard that it was designed as a subsidy, or have forgotten (whether through motivated reasoning or the simple passage of time). I think this is a form of tech debt. You have an algorithm that's not adapting to new circumstances, the clean solution is too difficult / expensive, so you just hack some of the parameters of the existing algorithm to give good-enough answers in the current circumstances. Eventually everyone forgets the history and assumes those are the "correct" parameters, and resists changing them even if the system has moved out of the circumstance under which the parameters gave an OK result. > the author is complaining that the retail price of electricity doesn't reflect the variable costs I think you mean "doesn't reflect the fixed costs"? And yes, it might have been better if I'd taken the time to introduce the terms "fixed cost" and "variable cost".
- bonzini 5y ago
  I have a question since I am not in the US: is net metering based on paying for the difference between consumed and produced energy (kWh), or between the prices of consumed and produced energy?

by cletus 5y ago

SamBam 5y ago

> It's quite an overt and deliberate subsidy to foster solar power technology I'd say that the issue the author is addressing is that it is not so overt. Sure, if you meditate on it it becomes clear it's a subsidy, but I think the vast majority of the people who take advantage of it simply think "I produce as much as a use, so of course my bill should be zero."

dboreham 5y ago
Can confirm, having talked to family members with recent solar installations.
- stevemadere 5y ago
  The vast majority of people are unwilling/unable to think deeply enough about the system to understand it. Thus, the simplified rule of thumb that generating electricity reduces your power bill is needed for them to even understand the general direction of what needs to be done. Perhaps the power utility could include an explainer page at the back of the monthly statement for those with the interest and capacity to understand it. Maybe 2% of people will read and understand it. The other 98% can just be smug about their lowered power bill and blissfully unaware of their part in accelerating the market shift to solar.
greendave 5y ago
Well, if my net usage from the grid were to drop to zero, without solar (say because I used a gas generator or whatnot), I’d basically be paying the utility zero too (modulo some small connection fees). The utility still wouldn’t save on any of its fixed costs though. What net metering with solar does is simply make this option much more practical. The straightforward solution would be to fund major infrastructure costs using something other than volumetric pricing. But it’s easier to just impose fees on solar.
- Macha 5y ago
  Or to put in a smaller scale and not require adding your own generation, are you stealing from an electricity company's fixed costs if you turn all your applicances off when you go on holiday, or if you have a holiday home which is only occupied 25% of the year? I think the answer is clearly not.
  - greendave 5y ago
    Or for that matter, switching to more efficient appliances or other types of conservation.
- SamBam 5y ago
  But there's a huge difference between actual zero usage and net-zero usage. That's the whole point. If you're using a generator (or, as another comment said, just use hardly any electricity) then you're not a burden on the system at all (or barely). If you're "net zero" because you feed the grid your excess power during the day and take away power during the night, you're using all their infrastructure. In your example, you don't need the grid, so it makes sense not to pay grid overhead (minus arguments about how we still pay for schools with taxes even if we're not using them). In the solar example you absolutely need the grid. So net metering down to zero is definitely a subsidy. A subsidy I absolutely agree with, but a subsidy none-the-less.

hervature 5y ago

Perhaps you and I are reading this differently. In my opinion, the author clearly delineates the two to be able to make this claim: > In other words, the direct cost of providing an additional unit of electricity or natural gas is only 23% of overall operating expenses. The way I read it, the author is not claiming the subsidy is the misleading part, just that, once there is mass adoption, the price of everything will actually go up to something very close to the current costs being paid by non-solar panel households. That is, at some point, homeowners who build solar panels right before this subsidy ends will get burnt very badly.

marcosdumay 5y ago
There's the marginal cost of electricity, and there's the marginal cost of electricity at peak time. The second one is much higher, and solar hits precisely it. Yeah, there is still a subsidy and it will go away at some point, but it's not 77% of the costs like the article states.

snewman 5y ago

Author here. Thanks for the feedback! Agreed that net metering was deliberately designed as a subsidy, and that there was nothing hidden or underhanded about this, it was (and remains) all quite overt. And yet. The inspiration for this post was a discussion on my town's email list, where a lot of people were talking about net metering as if it were the natural and obvious way of doing things (and thus were very upset at the proposal to weaken it). They either never heard that it was designed as a subsidy, or have forgotten (whether through motivated reasoning or the simple passage of time). I think this is a form of tech debt. You have an algorithm that's not adapting to new circumstances, the clean solution is too difficult / expensive, so you just hack some of the parameters of the existing algorithm to give good-enough answers in the current circumstances. Eventually everyone forgets the history and assumes those are the "correct" parameters, and resists changing them even if the system has moved out of the circumstance under which the parameters gave an OK result. > the author is complaining that the retail price of electricity doesn't reflect the variable costs I think you mean "doesn't reflect the fixed costs"? And yes, it might have been better if I'd taken the time to introduce the terms "fixed cost" and "variable cost".

bonzini 5y ago
I have a question since I am not in the US: is net metering based on paying for the difference between consumed and produced energy (kWh), or between the prices of consumed and produced energy?